Greif Details Restructure Plan

August 23, 1985|by TOM MOYLAN, The Morning Call

Low sales, excess manufacturing capacity, European competition, the strong dollar and three years of red ink contributed to a decision by the Greif Cos. of Hanover Township, Lehigh County, to close three plants, a company vice president said yesterday.

Andrew T. Smith, Greif's vice president of human resources, said a significant majority of the 170 employees at the company's Fredericksburg, Va., plant, will beoffered jobs in Hanover Township. He said there will be "a lot of movement within the (local) facility" and said it is "not possible to speculate about layoffs" at the local facility.

Under the company's long-term plans, plants in Fredericksburg, Verona, Va. and Shippensburg will be closed. All coat making operations will be consolidated in Verona while all raw material handling and storing, cutting, pants manufacturing, finished goods warehousing, distribution and administrative functions will be consolidated in the Hanover Township location.

Smith said the decision to close three of five plants stemmed from "our overall economic circumstances." He said sales volume was insufficient to support the company's considerable factory space.

Inventory levels have been "relatively high," Smith said, and sales have been sluggish. He said that for the first time, Greif's higher-priced men's sportswear have been hurt by European imports, primarily from Italy.

He said the dollar's strength in relation to foreign currencies have made imported men's clothing attractive pricewise.

Smith couldn't supply sales and earnings figures but did say that "we've been in the red since 1982" and is still operating overall at a loss.

He said excess manufacturing capacity existed at all five plants and said no one facility was viewed as a poor performer.

Smith said Greif expects to save "in excess of $5 million a year in operating and overhead expenses" when the closings are complete. He said the two surviving plants should be operating "as close to 100 percent (capacity) as you can get."

He said there is no timetable for plant closings, but said none are expected before the end of this year.

The closings will affect about 670 employees at the three plants. Smith said "vast majority" of the 300-some employees at Bridgewater will be relocated to the Verona plant 15 miles away.

A majority of Fredericksburg employees will be offered the opportunity to relocate to Allentown at company expense.

Smith said Greif "hasn't even gotten to the point of addressing" what will happen with the less than 200 employees at the Shippensburg plant.

Neither has the company reached the point of providing job placement or retraining for displaced employees, Smith said.

The consolidation in Verona could mean about 60 short-term layoffs there, Smith said.